Dorin Lenta, our Director of Corporate Solutions, this month hosted a panel discussion on behalf of LSEG to explore the future of ESG reporting as energy companies adapt their strategies in response to the energy crisis.
The panel of experts included:
- Jack Simmons, Sustainable Investment Research Lead at LSEG
- Lindsay Davies, Senior Sustainability Strategist at Ever Sustainable
- Toby Moore, Senior Director at Citgate Dewe Rogerson
The panel discussed how energy companies must review their short-term strategy to increase energy productions to meet the current mismatch in supply and demand, all against a backdrop of a time of extraordinary flux for the energy sector. Meeting the conflicting needs of balancing production to meet short term demand with investing in the long-term clean energy transition, while also remaining attractive for investors and rewarding their loyalty is a complex challenge.
Governments have also had to respond to the energy crunch in a politically fraught landscape. Policymakers have introduced a range of different policy packages to target excess company profits, provide mitigation of the impacts on consumers, and also provide investment into future energy security. Panellist Lindsay Davies noted that the introduction of temporary taxation measures has been met with negative sentiment form the industry, whereas the use of existing windfall taxation instruments would signal a more stable regulatory regime so the energy sector can plan their decision making accordingly.
With the sector’s windfall profits and record-breaking year in share buy-back programmes, the argument around if companies should be using excess funds to reward shareholders rather than investing these funds into decarbonisation projects has been hotly debated in the media. The energy sector is currently under intense scrutiny from regulators, politicians, customers and media, and external communications need to be considered carefully. Toby Moore commented that companies need to communicate clearly, transparently and regularly to build trust with their customers and stakeholders.
Despite the current backdrop, ESG remains top of mind for business leaders in the sector. LSEG’s Jack Simmons reflected that capital spending decisions will be based on long-term projections and expects companies to continue to think about managing the energy transition. The business case for acting early and long-term benefits of decarbonisation strategies has been made clearer because of the energy crisis, and it’s now getting more top table consideration.
The panel felt the jury is still out on how much of an impact the current energy crisis will have as a catalyst for either the green energy transition or for a return to more use of fossil fuels to meet demand, but it’s been described as a historic opportunity to accelerate the green transition.
As we recover from the energy crisis and make energy supplies more secure, discussion will turn to the risks of not responding to climate change. ESG gives companies key opportunities to engage with their stakeholders beyond conversations about the return of capital to shareholders. ESG has been pushed to the top of the agenda over the past few years and it presents many opportunities for businesses to be more resilient and innovative.
You can watch the webinar in full here: www.lsegissuerservices.com/spark/energy-crisis-strategy